Executive Summary
Today’s customers are mobile and communicate while on the move through smart phones, cell phones, Blackberries, PDA’s, or laptops. In addition to communication devices, other forms of portable electronic devices such as digital cameras, video cameras, DVD players, iPods are also freely available. Each of these devices requires power that is supplied through a battery, which has a limited lifespan.
As these portable devices become more and more ubiquitous the need for battery’s or portable energy will increase. According to Butler 2009, “the [global] battery business is expected to grow from $36 billion to more than $50 billion by 2015”. In USA alone, the consumption of batteries in 2012 is estimated to be around $16.8 billion (Freedonia Group, 2009).
Target customers who purchase batteries are highly mobile, spend considerable time on the Internet, price conscious, and very comfortable making online transactions. This market has a huge potential which can be tapped through the implementation of a solid Internet Strategy. The primary benefit of implementing this strategy is that mobile users can browse and purchase our products through the Internet.
This Internet Strategy will allow Portable Energy Inc. to be a B2C (Business to Consumer) and a B2B (Business to Business) company. B2C approach will allow users from around the world to purchase the products through the website. B2B approach will allow businesses to interact with each other and allow orders to be placed with suppliers directly and improve efficiency of supply chain.
The primary element of this plan is to develop a website which will allow users to browse the existing database of batteries and make instant purchases through a variety of payment methods.
The cost of developing, hosting and maintaining a website, and related hardware and software costs is estimated to be anywhere between $120,000 to $150,000 but the associated cost benefits in terms of savings in the first years is expected to be around $200,000. This Internet Strategy is aligned with the Corporate Strategy of global expansion to increase sales, cut sales and support costs and improve quality of service.
Strategic Planning
For Internet Strategy to be better aligned with Corporate Strategy there is a need to understand the market and customer needs and the core competencies of the company.
This section explores the dynamics of the market Portable Energy Inc. operates in, its customer segmentation, industry specific factors that are critical to the success of the company, and the fundamental processes the company must excel in to differentiate itself from competition.
Market Analysis
Millions of portable electronic devices that exist today depend fully or partially on batteries. The battery market is comprised of non rechargeable batteries called primary batteries and rechargeable batteries called secondary batteries. Some primary batteries have a shelf life of 10 years and are more compact as compared to secondary batteries (Pure Energy Inc.).
Among primary battery market, alkaline batteries dominate and in the secondary battery market, trends show that Lithium-ion (Li-ion) batteries are leading while demand for Nickel-Cadmium (NiCd) is shrinking (Buchmann, 2004). Energy Market Research cites a Freedonia Group report according to which, “Sales of primary batteries are expected to rise faster than secondary types through 2012”.
The report also forecasts that the battery market in China will outpace that of USA to become the world’s largest battery market. A strong global demand for battery powered portable devices will further drive growth mainly in secondary battery market. This shows that the market is set to grow and Portable Energy Inc. needs to position itself to take advantage of this growth.
Customer Analysis
The consumers of battery are all users of portable equipment. However Portable Energy Inc., is currently only targeting users of portable communications and computing devices, entertainment devices, personal items and power equipment. Communication and computing devices includes cell phones, smart phones, Blackberries, iPhone, cordless phones and laptops.
Customers who use these form the major customer base and range from 13 years to 60 years and above. Entertainment devices include digital camera, camcorders, iPod, MP3 players, and portable audio. The age group using these devices is similar to the communication device user group but may include those who are more fun loving and enjoy entertainment while on the move.
Personal items include cordless shavers, hair dryers, and toothbrushes. This is a significantly smaller customer base that has not been properly served.
Cordless power equipment users are a very specialized group of users who are trades people working mainly in the construction industry or home users interested in owning simple household equipment. Besides these individual consumers, corporate users can also form a significant customer base for batteries.
Critical Success Factors (CSF)
As identified in the customer analysis section, the major segments of the customer base are those who are mobile and enjoy entertainment while on the move. Every industry has CSF that is unique to the industry and based on the market and customer analysis, the following factors are determined to be most important for success in the battery industry.
- Market Segmentation – This is an important factor because it can be used as a basis for developing advertisements and also selecting the channel of product promotions. For example users of communication devices such as cell phones can be better reached through online advertising as compared to print media.
- Marketing, promotion and differentiation – With the clutter of companies in the market place, “differentiation” is critical to the success of the company (Chittenden, 2009).
- Pricing – Keeping product costs low will help improve sales among the price conscious consumer base. This can be a huge competitive advantage in the battery industry.
- Post sales support – Retailers should be available to help consumers with technical questions, answer warranty queries, return of defective parts etc.
- Distribution – Retailers should be able to distribute the products to the consumers in the cheapest and most reliable way. This factor will guide the company decisions on when and where to have warehouses.
- Reliable suppliers – A reliable supply of products through efficient supply chain can have a huge impact on the bottom line of the organization. This can also be a potential competitive advantage.
- Customer loyalty – In today’s age of Internet marketing, consumers have the luxury of browsing for the best possible deals in the comfort of their homes. Maintaining customer loyalty is very important for repeat sales and can be achieved through supportive post sales, easy website browsing, and prompt delivery.
- Information Technology – In today’s market, effective integration of new relevant web technologies with existing legacy databases can be a fundamental competitive advantage. Effective use of internet for marketing, promotion, ordering, sales, delivery and support can all help reduce costs and improve customer experience.
Core Competencies
Burdett (2008) believes that every firm must excel in fundamental processes, within the specific industry, that will benefit the customer base and sustain business profitability. Portable Energy Inc. sells batteries to the niche portable products industry. At the heart of its operations is a database listing of 5000 batteries and the products they are used for.
The company has also built a small customer database since it first started as a small retail shop in the Silicon Valley area. From the above success factors, the fundamental processes that Portable Energy Inc. excels in are its information base, ability to use marketing to effectively reach out to the target customer base, and its 24×7 service support.
To further build on its core competencies and tap into the global market the company intends to use the Internet to reach its consumers at significantly lower advertising expenses. Savings in advertising and sales expenses will translate into lower product costs, which when passed on to consumers can give the company a competitive advantage.
Situational Analysis
This section is a brief assessment of the current situation in terms of its current strengths and weaknesses. It will also attempt to identify the opportunities and threats that may exist and how the implementation of the Internet Strategy will help tap into the opportunities.
Current Situation – Strengths and Weaknesses
The Company serves the niche in the battery market. Its greatest strength is the database of 5000 products and the associated equipment that uses the battery. Its ability to use marketing tools such as advertising and promotion in traditional print media has so far been effective in reaching out to targeted customers. This and solid customer support has helped it grow and maintain a loyal customer base.
Over the years the markets have evolved and most consumers have easy access to the Internet. Most consumers, especially those within the age groups of 13 and 55 spend considerable time on the internet and groups between ages 20-55 and very comfortable shopping and using credit cards for purchasing products online. Portable Energy Inc. has not yet targeted this group and may be loosing them to competitors.
Secondly the current method of selling through the toll free 1-800 number can only be used for north American customers and not help achieve the corporate goals of the company which is to grow as a global provider of batteries. Thirdly, once an order is received, considerable time is spent in searching for products and checking for product availability which impacts quality of service and delivery times.
Target Situation – Opportunities and Threats
Within the battery industry, the company has several competitors who have already implemented Internet as a tool to reach out customers. BudgetBatteries.com is based in Florida (USA) claim they offer top quality batteries to both retail and industry at extremely competitive prices (Budget Batteries).
Low Cost Batteries.com located in KY (USA), specializing in laptop computer and cellular phone batteries claim they sell top quality batteries at the lowest possible price (Low Cost Batteries). Usa-batteries.com with a warehouse in Brooklyn, NY (USA), claims to be a trustworthy E-Commerce website since 2005, focussed on online sales of Laptop battery, digital camera battery, camcorder battery and charger (USA Batteries).
These competitors already have a head start in targeting a larger online customer base and are using their experience to improve service, which can be a major threat for Portable Energy Inc.
In spite of the clutter of companies many of which are already using the internet, opportunities for growth does exist. An effective strategy would be to capitalize on existing strengths to help the company achieve its corporate objectives which is to be a global provider for batteries, improve quality of service, and cut costs in sales and support.
These objectives can be partially achieves through the implementation of the Internet Strategy. Firstly, web technologies can interface with the existing database and allow users to search for batteries themselves which will eliminate much of the costs involved in achieving sales.
Secondly, a technical FAQ that will answer many of the common questions and having the customer place the orders online will allow the support staff to be scaled down. Both these will directly translate into savings which can be passed on to customers.
By creating a Quality Assurance (QA) department and moving some of the sales and service personnel to this department, the company can achieve its objective of providing quality service to its customers. Lastly the website can be used to differentiate itself from the clutter of companies and can be used not only as an effective tool to reach a large global audience but also as a support tool to manage customer requests.
Implementation Strategy
To effectively develop and implement an Internet strategy it is important to understand the existing environment within the company. Internet and Intranet are networks that must be viewed as business tools and should be aligned towards corporate goals.
Intranet
Intranet is a private network that exists within a company and includes computers, servers and other networked devices. Currently users have some kind of informal network connectivity.
To make optimum use of this plan, it is important to first implement a robust intranet infrastructure, which means all computers in frontline departments such as sales, service, and QA should be interconnected. Moreover the database server needs to be connected to the network which will allow the web browser to connect and display data on the webpage.
Internet
Internet is a public shared public network that is external to the company. Firewalls are security devices that separate the public network from the private network. Below are a few factors to consider before implementing the website as a marketing tool. These factors will serve as functional specifications to develop the website. An effective and well designed website should incorporate most of these specifications.
Domain name – According to Callan, A domain name is a unique identity on the web and is imperative for the online success of a company. It is also preferable to have a.COM domain which is small, easy to remember, and describes the business. For example instead of crux.com it is advantageous to have cruxbattery.com.
Reliable Hosting – A website is an online store that can be visited by users anywhere in the world, across all time zones. It is therefore important to ensure the online store is open 24x7x365. Decision on whether to host the website internally or on an external hosting company must be carefully weighed.
Search Engine Optimization (SEO) – Users enter key words in a search engine such as Google or Yahoo and websites are displayed, depending on the popularity of the website. Websites that rank higher on the search engine have a better chance of being visited by consumers.
Interactive and responsive – This is perhaps the most important element of developing an effective website. Websites should invite customers to learn more about its products through custom created graphics or through a chat session. Invitations to customers to participate in surveys, complete feedback forms, or register with the website are just some ways to improve customer’s online experience.
Feedbacks are effective tools in evaluating the performance of the website and can allow the management to align internal processes to improve efficiency. Building customer trust is not an easy task and allowing interaction will definitely help in repeat business (Xelonline).
While it is important to invite consumers to be interactive it is also important to promptly respond to their feedback. Response can also be in terms of introducing new products to meet the demands of the constantly changing market.
Language – The corporate goal is to be a global provider of batteries. As mentioned before emerging economies such as China will soon outpace USA in the battery market. It may be a good idea to have a Chinese language option which will allow users to switch from English to Chinese.
Ecommerce – The website should allow the consumer to make a purchase in the shortest and safest possible way. The customer should be automatically moved to a secure site verified by a reputed third party site such as Verisign.
Challenges
Implementing a technology solution always comes with its associated challenges and it is important to weigh the benefits of implementing this solution. The benefits of implementing an Internet Strategy have been established and the associated costs have been estimated.
One of the challenges is to find a suitable company to design the website which will incorporate the above specifications as well as integrate with the existing database. Compatibility issues may require the database to be updated to a new system. For example if the current data is in a simple excel spreadsheet it may have to be entered into a database such as MySQL.
It is also important to research and identify a reputed hosting company that will provide reliable services along with traffic reporting and SEO tools. Implementing various features can also be a challenge. For example, a single feature such as languages can bring up issues speed, translation, font support, and cost (StylusInc, 2005).
Besides technological challenges and Internet Strategy may also have a profound impact on the management capabilities. A website has the potential to transform a local company into a global company which will require management to improve supply chain efficiency and develop new delivery and support channels.
Conclusion
In conclusion, implementing the internet strategy is in line with the corporate strategy of increasing sales by reaching out to a global audience. This will also help in cutting sales and support costs and improve the quality of service. As with every new technology, there are associated challenges and these have to be studied and weighed with the benefits of implementing the solution.
References
Butler, B., 2009. The Battery Market Will Charge Ahead. Web.
Burdett, A. C., 2008. Define Critical Success Factors (CSF). Web.
Budget Batteries, 2007. Web.
Buchmann, I., 2004. Battery statistics. Web.
Callan, D., Your domain name. Web.
Chittenden, S., 2009. 7 Secrets to Online Business Success. Web.
Energy Market Research, Batteries to 2012: Freedonia. Web.
Freedonia Group, 2009. Batteries to 2012. Web.
Low Cost Batteries. Web.
Pure Energy Inc, 2008. Battery Types: Which Batteries to Use? Web.
StylusInc, 2005. How can your website speak multiple languages to your customers? Web.
USA Batteries, 2009. Web.
Xelonline, Importance Of Having An Interactive Website. Web.